Skip to comments.Hospital-employed physicians drain Medicare
Posted on 11/20/2017 5:21:23 PM PST by spintreebob
Healthcare costs for four common procedures are rising as hospitals and health systems employ more physicians, according to a new study.
A 49% increase in hospital-employed physicians between 2012 and 2015 led to a $3.1 billion increase in Medicare costs related to four specific procedures in cardiology, orthopedics and gastroenterology, according to analysis from consulting firm Avalere Health.
Medicare paid $2.7 billion more for diagnostic cardiac catheterizations, echocardiograms, arthrocentesis and colonoscopies delivered in hospital outpatient settings than it would for treatment in independent facilities, while beneficiaries footed a $411 million higher bill. Hospital-employed physicians performed more services in costlier hospital outpatient settings, resulting in up to 27% higher costs for Medicare and 21% for patients. For some of the procedures studied, employed physicians were seven times more likely to provide more services in a hospital outpatient setting than an independent physician's office, which contradicts healthcare's developing value-added mantra.
The employment trend seems to have shifted care to higher-cost locations, which is concerning, said Robert Seligson, president of the Physicians Advocacy Institute, which published the study last week. But the potential impact on quality still needs to be explored, he said.
"Hospital consolidation pushes healthcare costs upward," Seligson said. "The impact of hospitals owning outpatient practices places a greater financial burden on Medicare beneficiaries and on taxpayers."
More physicians are joining larger organizations, in many cases major health systems, to take some of the uncertainty out of their business. Rising compliance costs related to satisfying new payment models, growing administrative burdens for managing data and documentation, and Medicare and Medicaid's lower reimbursement levels, are unsettling independent physicians and putting their practices in jeopardy.
As employees of larger organizations, they may benefit from higher reimbursement for services performed in the system, a streamlined administrative process, an integrated model that can better tackle population health, and from potentially qualifying for the 340B program that requires pharmaceutical companies to discount drugs for providers who treat a large share of uninsured and indigent patients.
In turn, health systems have the potential to secure more referrals and spread costs over a wider patient base.
"When hospitals grow their physician network, with a subsidy of $150,000 to $200,000 per physician, they have to cover those costs by driving ancillary services and (getting more people) in hospital beds," said Dr. Jeffrey LeBenger, CEO of Summit Health Management, an integrated, physician-led independent physician group that includes some 800 doctors. One of the main drivers of physician acquisitions is to increase referral networks, he said.
While research suggests prices will likely rise with the rapid increase of hospital-employed doctors and that referral patterns will lean toward the system that employs them, it's been inconclusive on the impact to quality. The jury is still out on whether vertically integrated providers will yield greater efficiency, said Matthew Katz, CEO of the Connecticut State Medical Society, who is also a board member of the Physicians Advocacy Institute.
"There is a disconnect in the payment model that is presently employed. The cost of care is based on the payment model and is not driven by value or quality," Katz said, adding that the payment models should adapt.
Between 2012 and 2015, the number of physicians employed by hospitals grew by 46,000 (49%) while the number of physician practices employed by hospitals increased by 31,000 practices, an 86% increase.
These additional costs may not be sustainable, said Joel French, CEO of SCI Solutions, which offers web-based access management products that connect patients, referring physicians and hospitals. Even though the doctors are employed, health systems run into problems with physicians' referral patterns and can experience out-of-network leakage of 30% to 40%, he said.
"In the world's most complicated regulatory environment, why do we believe hospital operators can somehow be confident in managing physicians? The record shows they aren't," French said.
Some payers have been pushing back on hospitals and systems that have profited off reimbursement rules that allow them to charge higher fees for services delivered in hospital off-campus facilities than their independent ambulatory counterparts. Anthem, for instance, will no longer pay for elective MRIs or CT scans for its fully insured members that are delivered at hospitals in nine states.
While CMS lowered these "facility fees," there's still an incentive for hospitals to employ more physicians, coupled with the greater leverage hospitals would have with private payers in negotiating payment rates, healthcare policy experts said.
"We do document price increases after a hospital acquires physicians and part of that are the facility fee payments," said David Dranove, professor and co-director of health enterprise management at Northwestern University's Kellogg School of Management.
In one instance, a colonoscopy would cost Medicare 164% more ($1,090 versus $413) if provided in a hospital outpatient setting than in an independent physician's office, the Avalere study found. Researchers studied Medicare payments and beneficiary responsibility using a model that assumed the same patients would receive the same procedures but in a different care setting.
While the reimbursement rules are actively changing and the march of rising healthcare costs has slowed, more physician practice consolidation is likely, experts said.
"Continued consolidation in the hospital market will absolutely increase healthcare costs in the short run," LeBenger said.
The ACA empowered HHS to increase regulations. Those regulations punish physicians in private practice and forces many of them to sell their practice to big hospital corporations.
Of course, there are no big hospitals in small towns and rural areas. So the ACA has aggravated rural healthcare access.
These are the types of things Trump's HHS/CMS/ONC/MITA, and Congress should address.
Address the COST side of healthcare by getting the Feds out of the business of telling doctors and hospitals what they must and must not do.
Seems like another classic example of when the government gets involved in something, it gets that way more expensive than it ever was before.
Cardiac catheterizations in a physician's office? Not on me, baby.
Texas doesn’t allow hospitals to employ physicians and bills have spiked through 3 rd party management deals.
I read this until they starting talking about going to out of hospital facilities.
Before you open your body to a surgeon, check out the infection rates. They are not regulated like hospitals.
This same thing is true with Medicare, Medicaid and private or employee insurance. I don’t know about Obamacare but suspect it is worse.
Did you ever try to interpret a bill following surgery. Everyone in the hospital seems to get a cut. It is crazy.
Go to a nursing home where most are with Medicaid or medicare. A foot doctor comes in and goes to see a patient, then goes to treat every patient in the nursing home. A rip off. Tomorrow another specialist comes and the same thing happens. A terrible rip off.
There must be some control put into place to handle these fraudulent practices.
Just more people of the same, its all a big circle in medicine....
Wasnt all that long ago that hospitals were buying up physicians practices...didnt end well then.
Now you cant get a community primary care physician to even step foot in a hospital, and certainly not after hours...hence, the hospitals now staffing in house physicians to cover the community docs patients after hours and on weekends...the hospitalists Its a lucrative business, not that its shady in any way, but now a Doc is in house to see a Pt in the middle of the. night for an apparent drop in Hct, a hypotensive episode, a complaint of chest pain. They react in real-time, and medico-legally its justifiable...but it has the capacity to generate a lot of additional studies and tests.
Do people want real time healthcare or...?
People, and the government are quick to criticize the cost of healthcare until they are the patient.
Having said that, Ive cerainly seen cases of arguably inappropriate tests/procedures...but not so egregious to report.
But if you want a Doctor immediately available to look at you as an inpatient, dont be surprised if they order more care in this environment.
Nobody ever points the finger at physicians. They are in general highly regarded. But good grief. The naked greed! Physicians heal bodies but it’s perfectly fine for physicians to bankrupt the country? Bankrupt individuals? Unethical behavior on the financial realm? I think the “do no harm” axiom should apply to finance as well. Is that nuts?
Physician office visits in hospital based practices are paid a facility fee plus the office visit fee. Private practice physicians are only paid for the Office visit. The facilitys fee can be as much as the Office visit effectively doubling the cost of the visit.
What’s that got to do with shitty infection rates?
You are obviously not a physician...and thats not a dig, just a statement.
Medicare and Medicaid patients have little to no cost share in therir care, for themselves or their families. Why is that important?
Because Ive seen 90+ yo , long-standing NH pts who are severely
demented to the point they do not know who or where they are having all sorts of tests and studies at the families request to keep the relative alive, at all costs, because the cost to THEM is negligible if any, other than the effect on their conscience. It isnt up to the Doctor (thank god) to determine who deserves care
Neither should it be the Government...who pays based off satisfaction surveys and the like.
If your the on call in-house Doc and grandma is circling the drain...and you call DPOA who says do everything , its not like you have a choice. Do it and you get criticized, dont do it and you get sued.
Great system, no?
Nothing...yours was just the last reply. Sorry.
But if you want to talk infection rates, I can do that too ;)
Doctor here are paid disproportionately high compared to every other first world country. Insurance and administrative middlemen are part of he problem too but all of these costs need to be cut if we are going to have affordable health care.
“Because Ive seen 90+ yo , long-standing NH pts who are severely
demented to the point they do not know who or where they are having all sorts of tests and studies at the families request to keep the relative alive, at all costs, because the cost to THEM is negligible if any, other than the effect on their conscience.”
The flip side of this though, is the smaller community hospitals where we have taken our 90 year old, brain-injured, disabled mother. If there is a respiratory infection, mild flu, UTI, etc. they insist she must be admitted (against our wishes) and then they proceed to do every test and procedure they can get away with and try to keep her in the hospital as long as possible. We have been taking care of her for 27 years and know how to do it, except occasionally she gets sick and needs an antibiotic. Physicians don’t want to treat these things in their office anymore or one cannot get an appointment for days for an acute illness and they tell you to go to the ER. They literally take your patient captive- the hospitalist, that is. This is a very bad system. The hospital “best practices” require all this extra testing and treatment. The hospitalist changes all their medications and add more and then want them to see a specialist for 90 year old aging body issues.
YEP, why they are now screaming there is a shortage of saline...salt water with electorlytes. You can but a bag with tubing on Amazon for about $15, hospital charges ins companies $400-800 for that same unit of IV solution.
Last upper Endoscope I had to have done, they didn’t even use 1 where they normally do. Just put in a IV pick line and inserted the VERSED with a big needle. DUMB A$$ make you fast and get dehydrated before they perform the Endoscope. As a Senior I dehydrate rapidly. Nor did they offer me even a bottle of water after or a paper cup of water.
In my neck of the woods we have had the opposite experience. Doctors have always recommended the least amount of testing/care/treatment/meds when it comes to our very elderly family members. Usually that’s been appropriate. When it hasn’t, we’ve argued for and gotten additional care for our loved one. But we have never had anyone order/recommend anything unnecessary.
I understand that. We have disconnected cost from consumer. Hospitals and doctors charge monopoly money. Because they can. Patients over indulge in health services because they are disconnected from cost. Health care providers charge monopoly money for the same reason. Usless and expensive prescriptions that are lifetime drugs. How am I almost 50, my parents are 80, my wife is mid 40’s my kids are young adults and we are on zero meds? None. My brother and his family are similar in age and make up. No drugs. How is this possible? It’s a choice. None of us has seen a health care provider except for injuries in 25 years. We are healthy because of that. But we are responsible for living in a way that makes this possible.
You’ll notice that these costs only become significant when the government is paying the bill
Free healthcare, Free education, Free money.
What could possibly go wrong?
While it would be difficult, no one can be admitted to a hospital against their, or their DPOAs will....just an aside, thats a whole nother conversation.
But hospitals dont set best practices; they get set by regulatory bodies and CMS ...that is, the government. Hospitals get graded on their response to these illnesses with threats to withhold payments for non-compliance or failure to pass JCAHO (ie, the government again) if you dont meet best practices.
Medicine is no longer a relationship between Doctor and patient but rather between government and Doctor/Hospital. In this, the patient doesnt always come out ahead. Its a broken system to say the least
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